When Will My Insurance Cover a Rental?
Written by Team Clearcover
There’s no denying it: accidents, collisions, breakdowns—they all suck. And don’t they always seem to happen at the most inconvenient times? On top of in-the-moment hassle and frustration, you may be looking at damages that land your car in the shop. Hopefully, any repairs your car may need will be minor and can be handled quickly. However, if your car ends up needing to spend more than a little bit of time in the shop, you’re going to have to figure out another way to get around while it’s out of commission. When it comes to rental cars, trying to figure out what expenses your car insurance company will cover versus what you may be on the hook for can get confusing.
Don’t worry—we’re here to help. In this article, we’ll cover the following topics and questions:
Situations Where Insurance Will Pay for a Rental
Rental reimbursement coverage—also known as alternative transportation coverage or substitute transportation coverage—is a type of coverage that pays for your rental car or alternate transportation expenses (up to your predetermined limits) when you experience a covered loss.
It’s important to note that rental reimbursement coverage is typically a supplemental coverage option or add-on coverage to your policy. Liability coverage—the minimum coverage that is required in all but two states—only covers damage done to other vehicles and does not cover damage done to your own car. Accordingly, because rental reimbursement coverage must be tied to a claim for a covered incident to apply, most insurance companies will require you to buy collision coverage and/or comprehensive coverage (typically both) in order to add rental reimbursement coverage to your policy. Because all car insurance policies vary, always refer to the terms of your own policy or contact your insurance agent or car insurance company directly to determine what your policy does and does not cover.
If you do have rental reimbursement coverage, car insurance companies typically cover rental car or alternate transportation expenses for the following situations: an accident with another vehicle, damage from weather, damage from a wildlife, fire or smoke damage, and theft and vandalism.
Accident with Another Vehicle
If you are in an accident with another vehicle where you are not at fault—and the other driver’s liability coverage covers the repairs to your car—their insurance provider must also provide you with means for transportation while your car is out for repair. The at-fault driver’s insurance company will typically cover a car that is of similar value to your own vehicle and/or a similar type, but their coverage still may not pay for the entire cost of your rental. Additionally, it can take days, weeks, or even months for claims to be processed or fault to be determined, so you may end up needing to pay for your rental expenses out of pocket before the at-fault driver’s insurance company is able to reimburse you. Alternatively, if you have your own rental reimbursement coverage, you can use it to immediately cover your rental expenses (and allow your car insurance company to pursue reimbursement on their own).
If you are in an accident with another vehicle where you are found at fault—and have rental reimbursement coverage included in your policy—your insurer will cover your rental expenses.
Damage From Weather
If your car is damaged by weather or a storm, your rental reimbursement coverage should cover your rental expenses while your car is being fixed. Because storm damage is considered to be caused by external events outside of your control, it should qualify as a covered loss under your comprehensive coverage. Some examples of weather events and storms that comprehensive coverage typically covers include lightning, hurricanes, hail, windstorms, tornados, earthquakes, floods, and falling objects. You can learn more about storm damage and weather-related claims here.
Damage from Wildlife
Just like weather and storm damage, damage from wildlife is also covered under comprehensive coverage. Because comprehensive coverage is designed to cover any damages to your car that are not caused by a collision, most forms of animal damage will be covered. This includes a variety of damage types caused by animals of all different sizes. Some examples of animal damage covered by comprehensive coverage include wire damage due to rodents chewing through your electrical wires, damage to your vehicle from a collision with a deer, and damage caused by pest infestation. If an animal breaks into your vehicle and damages any personal objects inside your vehicle, comprehensive coverage typically won’t cover damages to your personal belongings. However, comprehensive coverage will cover any vehicle damages that were incurred while the animal was breaking in.
Fire or Smoke Damage
Comprehensive coverage also covers damage caused by fire. As a result, your rental reimbursement coverage would kick in while your car is being repaired for this covered incident.
Theft & Vandalism
Theft and vandalism typically qualify as covered events under comprehensive coverage. Accordingly, if your car requires repair due to theft or vandalism, your rental reimbursement coverage will pay for your rental expenses (within your specified policy limits).
Situations Where Insurance Will Not Pay for a Rental
Now that we’ve covered the types of incidents where your insurance will pay for a rental, let’s take a look at some situations where your car insurance will not cover your rental expenses.
If My Car Breaks Down Will Insurance Cover a Rental?
In short—probably not. In general, car insurance companies typically will not cover routine maintenance and mechanical breakdowns unless they’re caused by a covered incident associated with an existing claim.
This means that if you need a rental car or alternate mode of transportation while your car is in the shop for routine maintenance or due to a mechanical breakdown, your auto insurance will not cover your rental car or alternate transportation expenses—even if you have rental reimbursement coverage included in your policy.
If your car breaks down or is in the shop due to normal wear and tear, corrosion, tire replacement, fluid leakage, brake repair, or engine failure, you can expect that you’ll be on the hook to cover the cost of those repairs, as well as any related rental car or alternate transportation expenses you incur while your car is out of commission.
The following examples refer to instances where the issue is not directly related to a covered incident.
When Your Car’s in the Shop for New Tires
If you are getting new tires and need a rental while your car is in the shop, rental reimbursement coverage will not cover your rental expenses.
Engine Failure
If your car engine needs repair due to a mechanical failure or other malfunction, your rental reimbursement coverage will not cover your rental expenses. In order for your insurance to cover expenses related to an engine failure, it would need to have been the result of a covered incident.
Fluid Leakage
Different types of fluid that could leak from (or in) your vehicle include engine oil, transmission fluid, power steering fluid, brake fluid, water, and coolant. These types of fluid leaks are typically caused by breaks or cracks in gaskets, seals, hoses, reservoirs, or loose clamps and are usually the result of general wear and tear or maintenance issues. Therefore, these types of fluid leakage are not covered by your comprehensive coverage and your rental reimbursement coverage would not apply in these instances.
However, if your car has water damage and/or water leakage from a storm, flooding, or other weather-related incident, your comprehensive and rental reimbursement coverage may cover the rental expenses while your car is being repaired if you have filed a weather damage or storm damage claim with your insurer.
When Your Car’s Brakes are Being Fixed
If your car has faulty brakes that need repair, rental reimbursement coverage will not cover rental car expenses while it is in the shop.
Vacationing Rental
If you are renting a car for a trip or vacation, your policy will not cover your rental expenses, as you are not requiring a rental as a result of a covered loss or accident.
What is the Difference Between Rental Reimbursement Coverage or Alternate Transportation Coverage and Rental Car Insurance?
While rental reimbursement coverage and rental car insurance sound similar, they are actually two different types of coverage and are entirely separate from one another.
As we’ve discussed throughout this article, rental reimbursement coverage refers to the supplemental coverage that pays for your rental or transportation expenses when you experience a covered loss and need a way to get around while your car is out of commission.
Rental car insurance, on the other hand, refers to the coverage provided for any damages incurred to the rental vehicle you are driving—whether you are renting a car on vacation or to use while your car is being repaired. In many cases, the coverages for your own vehicle in your auto insurance policy will extend to the vehicle you are renting.
We recently surveyed over 600 American drivers and found that 48% of the drivers in our survey said they’ve purchased insurance through the rental car company, only to find out later that they would have been covered by their own policy. (You can learn more about other findings from our survey here.*)
This is why it’s important—and can potentially save you a lot of money—to know what coverages your own auto insurance policy may or may not extend to rental vehicles. It’s also important to note that coverage rules may differ when you are renting a car for business use, so check with your insurance company and/or employer to be sure.
Rental car companies will also offer their own rental car insurance coverage for you to purchase when you rent a car with them. Additionally, some credit card companies even offer rental car insurance as a travel insurance perk.
Pro-tip: Read the fine print. Credit card rental car insurance will differ from card to card and may be secondary car rental insurance. This means you would have to file a claim with your primary insurer first, and the credit card insurance would pick up the remaining costs that your primary policy does not fully cover. Additionally, credit card rental insurance often does not include liability coverage or cover medical expenses, luxury vehicles, or longer-term rentals. Read the fine print of your credit card rental insurance terms and familiarize yourself with the ins and outs of your own insurance policy to make sure you have the amount of coverage that’s right for you.
Is Rental Reimbursement Coverage Worth It?
So, now that you have the lowdown on all things rental reimbursement coverage, you may be wondering, is it worth it? Short answer: it depends. When it comes to car insurance coverage and policy add-ons, there’s no one-size-fits-all plan—everyone’s needs are different. Not to worry—there are some key things to consider that can help you make a more informed decision to best meet your needs.
Here are a few factors to consider when you’re trying to determine if rental reimbursement coverage is right for you.
Do you have another way to get around if your vehicle is in the shop or out of commission?
If you have another way to get around if your car is in the shop, that’s great! In this case, you might not need rental reimbursement coverage. However, it’s important to remember that repairs can be delayed and potentially last weeks, so you’ll want to consider how reliable your other transportation options are and how long they will be available for you to use.
Do you have comprehensive and collision coverages on your existing policy?
Rental reimbursement coverage is supplemental coverage. When and how you use this coverage is contingent on the specifics of your policy, so it’s important to know what coverages are included in your policy when making your decision.
Based on your financial situation, how much are you able to pay out of pocket to cover unexpected rental expenses?
Repairs can take anywhere from a few hours to several weeks. You’ll want to consider how much expendable income you have and whether or not you are equipped to pay a large sum out of pocket if your car ends up needing more than a few days in the shop.
If someone else is determined at fault for the accident, the at-fault driver’s policy will usually pay for your rental car. However, sometimes the claims process can take some time, which may delay your reimbursement from the at-fault driver’s insurance company. In this case, you’ll want to determine if you are able to cover those costs upfront and can wait for reimbursement, or if you would rather have your own insurance company cover the costs right away through rental reimbursement coverage.
What coverage limits are right for you? It’s also important to factor in coverage limits when determining if rental reimbursement coverage is right for you. With this coverage, typically you will see limits (that you choose when adding to your policy) for the amount covered per day, and in total per claim. For example, a common limit is 25/750. This means that your insurer will pay up to $25 per day for your rental car expenses, and will pay up to $750 total for your claim. While you hopefully won’t need to exceed your claim limits to cover your rental expenses, these limits are important to consider when setting up your rental reimbursement coverage, especially if you know you will require a vehicle more expensive than the economy option of a standard compact car (like an SUV or truck).
So, is it worth it? If the thought of potentially having to pay an unexpected, potentially hefty rental car bill out of pocket stresses you out, you might decide it’s worth it to you to pay a few extra dollars each month to add rental reimbursement coverage to your policy. However, if you’re not too concerned by the idea of having to cover unexpected rental car expenses and would rather save a few dollars on your premium each month and/or put that money towards your own emergency fund, you might find that rental reimbursement coverage isn’t a necessity for you.
Get Rental Reimbursement Coverage With Clearcover
Rental reimbursement coverage can be extremely helpful if you experience a covered loss and need a rental car or alternate transportation while your car is in the shop. It’s important to remember that rental reimbursement coverage will only cover rental expenses you incur due to a covered incident. Determining if rental reimbursement coverage is right for you ultimately comes down to your own financial needs, the coverages you have on your existing policy, and deciding which option will give you the most peace of mind.
Knowing exactly what coverages you should include in your policy can get confusing. And when it comes to rental reimbursement coverage, it might feel hard to determine if you need it and what your limits should be. Don’t worry—clearing things up is what we do best! At Clearcover, we’re here to break things down for you and make car insurance easy to understand. We keep things transparent so you can feel confident in your coverage—including rental reimbursement coverage! Take control of your coverage and get a free Clearcover quote today.
*We polled +612 U.S. residents on their spring break travel plans. The survey was conducted at 95% confidence, +/- 4% margin of error.
